Editorial Contact: Richard Hahn (716-372-2443)
First North American Rights
1998 Richard Janis
Insurance With Assurance
by Rick Janis
What types of automobile insurance are there and who is covered under my
Which type of automobile insurance should you purchase? It depends. Rental car
companies advertise that they are the quickest in getting you out of the airport and they
all do until you are asked the dreaded insurance question: “Do you want insurance on
this rental car?” Most people have no idea. Do you know?
For most of us, the automobile has become a normal part of our business and personal
lives. We take it for granted as we drive to work or down the block for a cup of coffee
and, for most businesses, without understanding exactly who is covered on the policy
and under what circumstances. Autos may be easier to operate today, but the opposite
is true of purchasing the proper auto insurance coverage for your business.
A little knowledge about this subject can go a long way in providing you with the
assurance to you that you are covered. Your professional insurance agent or broker will
have no difficulty in arranging the proper insurance for your auto needs and even telling
you whether or not you should purchase that car rental insurance.
There are 3 major categories of automobiles as defined by the insurance industry:
owned, non-owned and hired and borrowed. The most likely category for most
businesses is owned. These are automobiles owned by the business that are insured
under your business auto policy. As owner, you are covered for driving these vehicles.
The policy also covers any employee of the business as well as long as the employee is
operating the car within the scope of his or her employment.
Some businesses have no vehicles and therefore no automobile policy because the
vehicles are owned and registered not by the business, but personally by the owner.
These vehicles, covered under a personal auto policy, cover the owners and any other
named drivers for operation of the described autos. This type of insurance policy
requires the business to purchase a separate policy for non-owned automobile
There are several scenarios where a business can be held liable from the use of autos it
does not own. For instance, a business can be liable for an employee’s personal vehicle
that is used on company business or a vehicle left by a customer to have a car alarm
installed. In these instances, the business policy would cover these vehicles with non-
owned coverage added to the business automobile policy or simply using symbol 1 on
the coverage part. If the business has no automobile policy, non-owned coverage must
be purchased through the general liability or package policy. It is important to have this
policy especially when your employees travel to or from job sites using their own
personal vehicles or when transporting your equipment to and from the job sites.
The third category is for hired and borrowed autos. These can be either leased vehicles,
rental vehicles, autos used while owned vehicles are being serviced, or borrowed
vehicles used for company business.
In most instances, insurance is needed because the lessor, renter or borrower is
responsible to return the vehicle in the same condition as when hired, rented or
borrowed. Some rental companies are now charging up to $25.00 per day for these
coverages. However, if you have the proper insurance, you don’t have to worry about it
because the liability for these vehicles is usually combined with non-owned coverages.
That means that you are covered under your auto policy and the charge will be less than
$20 a year.
So next time you have to talk to your insurance professional regarding your automobile
coverage, you may want to ask one simple question: "If I can drive it legally, can you
cover it?" If his answer is “yes,” then you too can rush through airports and lease that
new Ferrari. The right coverage also means that you can sleep peacefully without
worrying about sending out an employee in his vehicle to respond to that 4 a.m. alarm.
Rick Janis is a Certified Insurance Counselor and president of the Alarm Insurance
Agency. With over 7 years of experience in the security industry, he has been
responsible for developing and managing comprehensive insurance and bonding
programs for alarm dealers and monitoring companies. Rick is CEU certified by NBFAA
and teaches CEU courses to the alarm industry on General Liability/Errors and
Omissions and Worker’s Compensation. He can be reached at 800-474-0933 or by fax
at 800-240-0631. You may also e-mail him at firstname.lastname@example.org.